[Code of Federal Regulations]
[Title 31, Volume 2]
[Revised as of July 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 31CFR550.417]

[Page 765-766]
 
                  TITLE 31--MONEY AND FINANCE: TREASURY
 
 CHAPTER V--OFFICE OF FOREIGN ASSETS CONTROL, DEPARTMENT OF THE TREASURY
 
PART 550_LIBYAN SANCTIONS REGULATIONS--Table of Contents
 
                        Subpart D_Interpretations
 
Sec. 550.417  Letters of credit.

    (a) Question. Prior to 4:10 p.m. e.s.t., January 8, 1986, a bank 
that is a U.S. person has issued or confirmed a documentary letter of 
credit for the Government of Libya as account party in favor of a U.S. 
person. The bank does not hold funds for the Government of Libya out of 
which it could reimburse itself for payment under the letter of credit. 
The U.S. person presents documentary drafts for exports to Libya made 
after 4:10 p.m. e.s.t., January 8, 1986. May the bank pay the U.S. 
exporter against the drafts?
    Answer. No. Such a payment is prohibited by Sec. Sec. 550.206 and 
550.209, as an extension of credit to the Government of Libya and a 
transfer of property in which there is an interest of the Government of 
Libya.
    (b) Question. On the same facts as in paragraph (a), the bank holds 
deposits for the Government of Libya. May it pay on the letter of credit 
and debit the blocked funds for reimbursement?
    Answer. No. A debit to a blocked account is prohibited by Sec. 
550.209 except as licensed.
    (c) Question. On the same facts as in paragraph (a), the Government 
of Libya, after 4:10 p.m. e.s.t., January 8, 1986, transfers funds to 
the bank to collateralize the letter of credit for purposes of honoring 
the obligation to

[[Page 766]]

the U.S. exporter. Is the transfer authorized and may the bank pay 
against the draft?
    Answer. Yes. In accordance with Sec. 550.515, the transfer by the 
Government of Libya to the bank is licensed. The funds are not blocked 
and the bank is authorized to pay under the letter of credit and 
reimburse itself from the funds.
    (d) Question. Prior to 4:10 p.m. e.s.t., January 8, 1986, a foreign 
bank confirms a documentary letter of credit issued by its U.S. agency 
or branch for a non-Libyan account party in favor of a Libyan entity. 
Can the U.S. agency or branch of the foreign bank transfer funds to that 
foreign bank in connection with that foreign bank's payment under the 
letter of credit?
    Answer. No, the payment of the U.S. agency or branch is blocked, 
unless the foreign bank made payment to the Libyan entity prior to 4:10 
p.m. e.s.t., January 8, 1986.

[51 FR 2465, Jan. 16, 1986]